Net Profit Before Tax As % Of Total Income - NZ Retailers
Use these figures as a guide to actual typical retail margins in Auckland, when you use the Shop theft Calculator.
||% Net Profit
|Fruit & Vegetable
|Fabrics & Other Soft Goods
|Floor Covering Retailing
|Domestic Appliance Retailing
|Sport & Camping Equipment
|Garden Supplies Retailing
|Watch & Jewellery Retailing
|Automotive Fuel Retailing
|Average All Retail
Source of data "The Retail Market in New Zealand"
An Analysis - 2009, prepared by: John Albertson
CEO, New Zealand Retailers Association July 2009
The Shop Theft Calculator Explained:
- Please note that Best Case shown in the Shop Theft Calculator
represents a business with strict inventory control, ongoing staff loss
prevention training and a combination of security systems and
strategies. A 1% loss is used.
- Worst Case represents a company with little or no anti-loss policies. An 8% loss is used.
- These percentages are based on the advice of Fred
Tarasoff, one of the world's leading authorities on loss prevention.
See article extract on page 3.
Some Thoughts From One Of The World's Leading Authorities
Shoplifting and employee theft will cost the retailer a great deal of lost profits and everyone pays for this crime.
Retailers suffer lower profits and consumers ultimately pay
higher prices. Some stores charge up to 7 cents per dollar to cover
retail losses which can make a business less competitive.
But let’s break it down a bit further and examine the actual cost of shoplifting to both the retailer as well as the consumer.
Many retail businesses are unaware of the impact of retail loss
on their business and some businesses live in a world of denial, in
terms of profits walking out their door.
There is a simple basic formula which applies to virtually every
single retail outlet from the mom and pop stores to the large retail
Formula for calculating total annual Retail Losses
(These are the calculations used in the Shop Theft Calculator)
Estimate your businesses gross yearly sales, then multiply this figure by a value of 1%.
Repeat this calculation again but this time take your gross yearly sales and multiply it by 8%.
Example 1: $1,000,000 (yearly gross sales) X 1% = $10,000 (retail
loss)Example 2 : $1,000,000 (yearly gross sales) X 8% = $80,000 (retail
Generally most retail businesses yearly losses are somewhere
between the two example figures of 1% and 8 %. Although your yearly
gross sales will vary the percentage figures will remain constant.
Please note that Example 1 represents a business with strict
inventory control, ongoing staff loss prevention training and a
combination of security systems and strategies. Example 2 represents a
company with little or no anti-loss policies.
Although at times there is a notion that shoplifting and internal theft is a victimless crime, this is in fact not true.
Everyone, except the thief pays as it is estimated that every
consumer in the US and Canada pay's a minimum of $250 each year because
of crimes against merchants.
Theft of a $2.00 item from a store operating on a 10% profit
margin requires the sale of $20.00 in merchandise to make up for the
loss. Supermarkets and other retailers operating on low margins of 1%
must sell $500.00 in merchandise, just to cover the cost of a $5.00
stolen item. It's easy to see how out-of-control shoplifting can quickly
threaten the viability of a business.
The cost of shoplifting is high and is expected to skyrocket due
to the global economic crisis. Retailers need to re-examine their level
of security and should begin to take a more proactive role in the battle
against retail theft. Most retail loss experts agree that in order to
be successful there needs to be a combination of anti-theft devices
combined with good staff training in the prevention of retail shrinkage.
FJ Tarasoff is considered a leading authority in retail loss
prevention and has been featured in numerous newspapers and magazines
including Globe and Mail, Small Business Report, Grocer and Hardware
Mag. etc. He has more than twenty five years experience in retail and
understands the cost of retail theft.
In 1989 a record store he owned went under in a large part due to
shoplifting. A few years later he was physically attacked by a
shoplifter while managing a health food store. These two events inspired
him to research and develop various training programs to better
prevent, detect and deter both internal as well as external theft. For
the last decade Tarasoff worked closely with law enforcement, security
companies, trade associations as well more than 250 shoplifters were
interviewed in order to better understand theft and how to best reduce
PO Box 32293 Devonport
Phone (09) 551 7716
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